December 10, 1964

New Tax Laws Would Wipe Out True Poverty

The Robin Hood myth dies hard. The taking from the rich to relieve the poor seems so logical on the surface that every generation since recorded history has had a go at it. But, alas, as the cliché goes, "the poor are always with us."

This is not to say poverty is to be accepted as inevitable—far from it. To be poor when you want desperately to live well, try hard to succeed and are willing to accept the responsibilities necessary to achieve above-average income crushes the human spirit. I speak from personal experience. We should do everything possible to provide opportunity for ambitious men to rise above low economic station.

Poverty is a relative situation. The average man today lives more luxuriously than the kings of old. The slum dweller would be much envied by ancient peasants. Yet, such historical progress is scant comfort to those of us who view the present state of society as an intermediate step in civilization. The best that can be done, in my opinion, is to REDUCE poverty.

Robbing the "haves" to succor the "have nots" makes an interesting fairy tale. Taxing the workers and savers to hoist the standard of living for the lazy and spendthrift, however, is Twentieth Century reality.

There is a proper use of tax money to conduct this "War On Poverty," but not as welfare which only makes misery a little more bearable for a short time. The root cause of CURABLE poverty is lack of jobs, and here is the incongruous part of U.S. unemployment. The help-wanted classified ad columns of all newspapers bulge with job offers, while 3 ½ million wage earners supposedly are out of work.

The problem should be one of bringing together those who want to work and the available jobs.

Some very small changes in the present tax laws -- or just some enlightened application of the existing statutes would wipe out true poverty overnight.

It is estimated that of the total listed as unemployed, less than a million bread-winners under 65 want jobs and cannot find them. The reasons for their unemployment result from lack of education, physical handicap, age or unwillingness to relocate in another community.

The bulk of those counted as unemployed are those in the process of changing jobs, married women retiring from the work world, seasonal workers and the plain lazy. Nothing in the world can be done about these.

Congress has appropriated a billion dollars to START the War On Poverty; and President Johnson has turned over this money to Sargeant Shriver, head of the Peace Corps, to spend. Insofar as Shriver's plans include the training of people and the relocation of both people and industry, the "war" can be useful. Those projects that dole out tax money without needed work in return is a cruel hoax that only postpones the day of reckoning for the recipients.

There are nearly a million so-called "small businesses" in the U.S. If each hired just one more employee, there would be no preventable poverty as we now know it. Of course there would be a higher calibre of poverty for those next up the totem pole, but that's a problem for the coming generation.

Today's tax laws are written for the hourly wage earner and the giant corporation. The individual proprietor and family corporation is being ground into oblivion. If this inexorable. process involved only the owners, we could shrug our shoulders and write them off as expendable drawbacks to the affluent society.

The planners, however, seem to have overlooked the fact that small business is a vast reservoir of jobs for the less skilled, the less educated, the under and over age, the less competent. Big business doesn't want these nonetheless-valuable citizens; and when stuck with them automates their jobs out of existence.

The government likes to deal with large corporations that efficiently deduct taxes from paychecks and forward them in nice large bundles to the Bureau of Internal Revenue. Small businesses are a headache — what with being late in sending in the money, making mistakes in filling out the forms, and frequently failing to come up with the last bit of scratch as they go bankrupt.

Probably no more effective way of suppressing small business could be devised than the present corporation income tax law. If a business makes a profit of less than $25,000 it pays a tax of 22 percent. Profits of more than this amount, regardless of the number of millions of dollars, is taxed at 50 percent this year and drops to 48 percent in 1965. The gulf between the two tax rates is almost impossible to cross.

Firms now bumping the small-business profit ceiling are discouraged from expanding and providing new jobs because net income has to double in order for profits after taxes to go up by one-half. Under this condition there is no incentive to grow a little bit at a time, in a natural manner, to accommodate an extra employee or two. The disproportionate requirement of higher sales, the extra book work, and the commitment to employment taxes is not worth the little profit finally left to the company.

I suggest that a graduated corporate income tax patterned after the personal income tax would enable the small corporation to grow and the giant corporation to pay a higher proportion of the taxes.

If the principle of taking from those better able to pay to help those less able is valid, then a reform of the corporate-tax laws is long overdue.

Author: Lindsey Williams